75% of credit card debt is unenforcable

[Matt1959]

Just been reading about this which I guess is old news now - or is it?

Apparently 75% of credit card debts are unenforcable ie no proper agreement set up when taking them out or something like that. Net result is (apparently) the debt is wiped, and interest paid over the period can be claimed back too with no adverse effect on personal credit ratings. Same for catalogue shopping. They don't do agreements, so the debts are unenforcable (apparently)

Whats this all about, leaving moral issues aside for a moment - googling the subject doesn't really bring up much hard info regarding success stories. Anyone know?

 

[Stonelaughter]

Yes (you hit on one of my "pet" subjects)

The Consumer Credit Act 1974 (as amended) lays down certain things; one of which is that if a body corporate allows you to buy something but does not require full payment immediately but rather allows you to pay in installments, it IS a credit arrangement and therefore IS regulated by the consumer credit act. (A bit circular but you'll see the effect in a moment). Further, the Act states that ALL credit must be backed up by a "properly executed agreement" (i.e. signed by both parties) in a form prescribed by the Act - which states the amount lent, the interest and charges, the full amount to be repaid etc etc etc (or in the case of "running account" credit like catalogues, current account overdrafts etc, it just needs to show the interest and charges). Any credit arrangement NOT covered by an agreement in this very strict form cannot be enforced in a Court - which essentially means that the debt does not exist.

When you buy stuff from a catalogue, you never have to sign a credit agreement; you just buy it, pay it back, and that's it... they seem to have "slipped through the net" as far as enforcement by the OFT is concerned. Which means that catalogue companies are taking a very real commercial risk by not using agreement forms when people take out catalogues. However, they seem to get away with it simply because people DO pay - and those who don't, accept the bullying that comes later and pay the debt collector. A lot of the time, if the Catalogue DOES take the risk of going to Court, the Defendant doesn't turn up for whatever reason, and the catalogue gets a "Judgement in Default" which means they can pursue the debt until it's paid.

So - if a catalogue take you to court and you're unable to pay, you may have "the perfect defence" which will get their claim dismissed; the Act actually states that lack of an agreement is a complete Defence in and of itself.

Please note - nothing in this post implies that it is OK to "buy" loads of stuff from a catalogue with the intention of never paying - this would be an offence under the Fraud Act 200?6 which replaces the Theft Act. The key thing with this is intent - if you intend to pay and can show that "beyond reasonable doubt", there is no offence - however if the Court is satisfied that you never intended to pay, the existence (or not) of a credit agreement becomes irrelevant!

 

[Stonelaughter]

p.s. If anyone is being chased by a debt collector or a creditor - whether they think they owe the money or not - they could do worse than visit www.consumeractiongroup.co.uk/forums or www.legalbeagles.info/forums (or both) to obtain advice. There are some seriously clued up people there, and lots of people with the same or similar problems.

 

[Figaro]

There was a thing going round my office about this, we had the forms filled in and ready to send off but then we were told that you had to have a spare £500 on your credit card for processing fees (which obiously gets wiped)

PLUS whatever bank you are with hates you and never let you bank there again!

 

[Stonelaughter]

Figaro can you explain what you mean? What forms were you filling in and what was the £500 for? The "unenforceable" bit refers to times when your creditor chases you for the money owing against a credit account where there is no "properly executed" credit agreement which meets the requirements of the Act. If they take you to court, your defence will be that the agreement does not meet the requirements of the Act or that no agreement has been produced - there are no "processing fees" associated with defending a court case unless you lose; and then the Court will decide how much (if any) of the cost of the case you will have to pay. In the Small Claims track, parties are mostly insulated against Costs claims unless there are particular circumstances which warrant the Court exceptionally awarding them.

 

[Figaro]

Figaro can you explain what you mean? What forms were you filling in and what was the £500 for? The "unenforceable" bit refers to times when your creditor chases you for the money owing against a credit account where there is no "properly executed" credit agreement which meets the requirements of the Act. If they take you to court, your defence will be that the agreement does not meet the requirements of the Act or that no agreement has been produced - there are no "processing fees" associated with defending a court case unless you lose; and then the Court will decide how much (if any) of the cost of the case you will have to pay. In the Small Claims track, parties are mostly insulated against Costs claims unless there are particular circumstances which warrant the Court exceptionally awarding them.

No, there was something going round that if you had opened the credit card account before april 2007 you could get the balance wiped and th account closed. Nothing to do with it being in court. None of us went any further because none of us had a spare £500 on the cards!!

 

[Stonelaughter]

That sounds like an urban myth to me... it all hinges on whether the individual agreement you signed has all the "prescribed terms" and meets the requirements of The Act. Agreement forms did not change in any particular way at April 2007, and to my knowledge any changes in the Law during 2007 were not applied retrospectively.

 

[Matt1959]

I can't get my head round this at all. This isn't the first thread I've seen about this issue and theres always an eery silence! Many people have credit card debts, if its true that 75% of them can be voided just like that, I'd have thought people would be clamouring to know more. Personally though, I think its a sh*tty thing to do. You borrow the money so you pay it back. I've always had a great experience with my Bank (second one that I've ever dealt with) both of them have supported me without question over the years and I don't begrudge them their charges actually!

So this credit card thing is hot air then Lots of opinion but few actual results...

 

[.Spiralling.]

So this credit card thing is hot air then Lots of opinion but few actual results...

not entirely hot air, no, but there are certain factors which have to be met, as StoneLaughter has described. And it's not all opinion, it's fact.

As stated before, deciding to try your luck and get the debt wiped just because you may be able to on a technicality is not really following the spirit of the laws involved.

It can be useful to know and there will be times when relying on these technicalities if legitimate, but in most cases if you took on the debt, you ought to be paying it back.

 

[makaveli]

That sounds like an urban myth to me... it all hinges on whether the individual agreement you signed has all the "prescribed terms" and meets the requirements of The Act. Agreement forms did not change in any particular way at April 2007, and to my knowledge any changes in the Law during 2007 were not applied retrospectively.

i work for such a compoany. we either take the matter to court for you on nowinnofee basis - or we assign ur credit card debt to our name and take the risk - yours is wiped cos we now have it. no myth!

 

[Barnie]

what ever happened to common sense, ie you borrow money you have to pay it back :|

 

[CKG]

what ever happened to common sense, ie you borrow money you have to pay it back :|

Look at it this way...

If there was a loop hole in the T&Cs that said the CC company or bank could have your house, wife and granny if you defaulted on your payments you can rest assured that they would exploit it and leave you out on your arse.

Though some may say that's a fair swap.

What's good for the goose is good for the gander.

 

[directmarketingadvice]

Look at it this way...

If there was a loop hole in the T&Cs that said the CC company or bank could have your house, wife and granny if you defaulted on your payments

You mean if you didn't hold up your end of the agreement?

I don't see that as the same thing. The credit card companies have held up their side and now people are trying to stiff them.

Ultimately someone will pay for these debts. If the debtors weasel out of them, the cost will be passed onto the rest of us.

Steve

 

[CKG]

You mean if you didn't hold up your end of the agreement?

I don't see that as the same thing. The credit card companies have held up their side and now people are trying to stiff them.

Ultimately someone will pay for these debts. If the debtors weasel out of them, the cost will be passed onto the rest of us.

Steve

Maybe that wasn't such a good analogy. My drift was they would probably stiff you given half a chance.

People can't repay stuff for many reasons other than being a champers swigging pikey on beer wages with a new DFS sofa.

Given the choice of loosing my home/wife/family (or maybe all three) or a wriggling out of an iffy contract scott free - I'd take the latter rather than fall on my own sword.

Though I suspect some pond life will abuse the loophole and get blinged up like Liberace for free.

 

[stugster]

My drift was they would probably stiff you given half a chance.

You mean reclaim the money they're (technically) owed by the person?

 

[Dawg]

This weaseling out of debt has always struck me me as odd, especially coming from business people. It's from the same mindset as thinking shoplifting is OK as it's only from big companies and they can afford it.

It's theft. Pure and simple. It makes no difference how the proceeds of theft are spent, the fact remains that it is theft.

As Steve says it pushes costs onto other people: basically it is stealing a small amount from each individual in a large group. From a practical, (read amoral), POV this small amount is multiplied by many times, (many weasels), until it becomes significant to each individual bearing the cost.

 

[makaveli]

This weaseling out of debt has always struck me me as odd, especially coming from business people. It's from the same mindset as thinking shoplifting is OK as it's only from big companies and they can afford it.

It's theft. Pure and simple. It makes no difference how the proceeds of theft are spent, the fact remains that it is theft.

As Steve says it pushes costs onto other people: basically it is stealing a small amount from each individual in a large group. From a practical, (read amoral), POV this small amount is multiplied by many times, (many weasels), until it becomes significant to each individual bearing the cost.

maybe. 20 million were mis-sold credit. the white paper recognised that the 1974 legislation was not doing its job. what is clear is that many agreements were not proper - so, in those cases, it is 100% lawful and correct that judges are invalidating them. the new law makes 'unfair relationships' - the court looks at inter alia health age and degree of financial pressure debtor was under - grounds for invalidating. as well as lack of prescribed terms. the flipside to the 'theft' argument is that nasty creditors were unfairly inducing (poor) people into taking credit. u could try to differentiate between 'theft' - re rich ppl who took out loads knowing theyd challenge later and 'perfectly accebtable contractual challenges' re normal ppl who were taken for a ride by nasty banks. thats a judge's job, amongst other things.

 

[directmarketingadvice]

maybe. 20 million were mis-sold credit.

What do you mean by "mis-sold"?

I worked on a pensions mis-selling investigation back in the mid-90s and, if comparable definitions are applied to credit cards, there's no way 20 million people have been mis-sold.

the white paper recognised that the 1974 legislation was not doing its job. what is clear is that many agreements were not proper - so, in those cases, it is 100% lawful and correct that judges are invalidating them.

You made a huge jump in logic there without giving an explanation.

Normally, if a contract doesn't adequately cover an arrangement, that doesn't mean all bets are off. It means there's a ruling made that's based on
logic and fairness - probably what would the contract have said had it covered that eventuality.

(though the legal bods on here may correct me on this)

u could try to differentiate between 'theft' - re rich ppl who took out loads knowing theyd challenge later and 'perfectly accebtable contractual challenges' re normal ppl who were taken for a ride by nasty banks. thats a judge's job, amongst other things.

Are you saying that, if someone challenges the contract in court, the judge will rule based on the case?

i.e. it's not cut and dried and, if someone hires your employer, there's a very real chance it'll go to court and the judge will tell them to **** off?

If so, does the person have to pay your costs, the legal costs of the credit card company... and their original debt?

If so, what happens if they don't have the money to cover that? Do you not get paid?

Steve

 

[makaveli]

no. we do no win no fee. credit cards are guaranteed (dont know how they are invalidating them, this creditcardkiller company - Rankine's). u r right - its a judicial balancing act and often means judge will amend agreements accordingly, not instantly invalidate them. BUT 99 percent of creditors arent even risking the court case , they just agree to settle.
how? no jump in logic! 20 mill mis sold - how is that relevant to pensions?: or, it may be but how does pensions make the figure wrong? mis sold cld mean - agreement not signed, agreement not contain all prescribed terms, not contain cancellation right, no agreement, etc
like i say , they are putting funds by and just settling before it gets to court: they know they mis sold the credit.
its ridiculous, we GUARANTEE to wipe credit card debt if agreed pre 04/07: hows that working for creditors? law'll probably change soon. or will it? the creditors r being punished for unfairly selling credit. simples.

 

[makaveli]

.. creditors being punished BY THE LAW MAKERS for misselling credit

 

[makaveli]

u r on the right track. for credit cards, we guarantee to wipe them. for 'option 2' we do nowinnofee and its 50/50 as to if court will rule in ur favour.. but if a agreement is clearly invalid they might well do, or at least reduce repayments.

 

[makaveli]

u can also challenge store cards and mortgage interest (not mortgages themselves). most ppl wanna do option 1 (assigning debt legally to us) but option 2 (challenging validity) is also popular - depends on the judge but an unsigned, presribed terms missing agreement is not going to look good in court.

 

[makaveli]

option 1 - assign debt to us. thats it - u r free of the debt. u pay £350 for first card , 250 for subseq ones.and 10% of the balance. like i say , the company we send the agreements to under option 1, they take most (we risk it - others we are stuck with) I DONT KNOW HOW THEY ARE INVALIDATING THESE CREDIT CARDS. apparently its to do with the purpose of credit cards having changed.

 

[makaveli]

just seen on another thread - ppl sometimes get confused. lack of prescribed terms means agreement only enforceable with a court order (s 65 CCA 74) doesnt mean its unenforceable.

 

[directmarketingadvice]

no. we do no win no fee. credit cards are guaranteed (dont know how they are invalidating them, this creditcardkiller company - Rankine's). u r right - its a judicial balancing act

So, just to be 100% clear: if you do go to court and you lose and the judge awards costs to the other side, your company will pay the costs, the client doesn't have to pay a thing?

Or, is it impossible that the judge will award costs?

Steve

 

[directmarketingadvice]

no. we do no win no fee. credit cards are guaranteed (dont know how they are invalidating them, this creditcardkiller company - Rankine's)

Are Rankines the same Rankines as

...

The highest profile debt dodgers are Basil and Amanda Rankine who live in Birmingham. They claim to have collected a six-figure sum from exploiting flaws in consumer credit agreements. But while HSBC admits to letting them off more than £9,000 (a "commercial decision", as fighting an uncertain legal area could cost a fortune in lawyers) other banks have fought back.

Earlier this year, the Rankines were the subject of a scathing judgment. They had taken American Express, Bank of Scotland, Halifax, HFC and Tesco Personal Finance to court to claim some £37,500, pleading alleged deficiencies in loan documentation. But the high court judge threw out their arguments, dismissing some as "pure sophistry" and others as "totally without factual or legal merit".

The judge said: "The Rankines have boasted to the court that they had managed to wriggle out of a further £65,000 (in addition to the £37,500) by raising consumer credit act technicalities, leaving the financial institutions to write them off as bad debts rather than take the trouble and expense of litigating for dubious reward against two individuals who are apparently on income support and exempt from paying court fees".

The judge dubbed the couple as vexatious litigants, issuing a "civil restraint order" preventing them from making claims or proceedings in any civil court.

Enquiring minds wish to know.

To read the whole article:

http://www.guardian.co.uk/money/2008/nov/29/debt-creditcards

Pay close attention to

Barclaycard, which was unable to state how many claims it had received, points borrowers to the alert from the Ministry of Justice and the Office or Fair Trading. This warns that consumers "should think very carefully before committing themselves to making claims and handing over hundreds of pounds in advance to do so, even where refunds may be promised if the claim is unsuccessful".

Steve

 

[Stonelaughter]

Let me clarify my position. I do not under any circumstances condone or encourage "wriggling out of" legitimate debt - however the law as it stands says that contracts for the supply of credit must be formed in a particular way in order to impose obligations on either party. Various organisations came up with various forms of "agreement" form in a fairly lax way which paid no real heed to the prescribed terms and form of the paperwork; and under the Law no contract is formed using non-compliant agreement paperwork. Thus, an agreement which is not compliant with the Law can only be enforced by a Court examining the case; and if they agree that the agreement is non-compliant they will have to take account of the character and apparent intentions of the borrower before making any order.

Clearly the Rankines were of a certain character and intended to litigate their way out of their debts on vague technicalities and poor reading of Law; and had already boasted about their previous exploits. This it is clear did not impress the Judge as to their honourable intentions or character and he therefore delivered his slam-dunk Judgement.

Rest assured however that many, many people have LEGITIMATELY won well prepared cases regarding non-compliant agreement paperwork because their character was assessed to be exemplary while that of the lender was assessed as less so in first being so lax as to create shoddy paperwork which gave no more than a nod to the Law, and secondly adding extortionate charges to the accounts in an attempt to bully the victim into paying far more than was owed.

The Law was designed to protect borrowers from unregulated, unscrupulous lenders who caused no end of grief and suffering to many, many people; while also providing certain protections for legitimate lenders who care about the Law.

 

[makaveli]

no win no fee so no fee unless u win the case

um sure they can award costs

 

[makaveli]

well, the Rankines ARE taking ppl to court. most of the time banks settle tho.

 

[Stonelaughter]

well, the Rankines ARE taking ppl to court. most of the time banks settle tho.

Not any more they're not. The Judge issued a "Vexatious Litigant" injunction forbidding them from bringing a civil claim in any British Court.

 

[limotek]

I agree with Matt1959, if you owe the money you should really pay this back. However, I can understand why people would want to get out of paying if they are being pursued by DCA's.

 

[hgtiling]

makavelli can u pm me your company details, Id like to have a chat with you if possible. Ryan

 

[LowcostPR]

BUT 99 percent of creditors arent even risking the court case , they just agree to settle.

They're not settling out of fear, or not wanting to risk it, they have better things to do than to deal with irksome companies like debt cancellation firms. Trust me, they don't fear you at all, they are simply irritated that firms like this are trying to encourage people to squirm out of their responsibilities.

the creditors r being punished for unfairly selling credit. simples.

You need to learn what "mis-selling" and "unfairly selling" means. It does not mean selling a reasonable credit agreement with a technicality missing in the small print, it means forcing a product on someone who does not need it or misrepresenting your position to get someone to sign up.

A lot of PPI policies were considered mis-sold because people were telling customers that they had to take PPI with the loan, or not even telling them they have added it.

The problem that you cause people is that you give them false hope about the possibilities (75% is simply rubbish. The "problem" has not been around long enough for you to get accurate data) then when it all falls through (which it invariably does) then the debtor will end up with every creditor taking legal action (bailiffs, charging orders, attachment of earnings ETC) because the debtor has shown that they will try and wriggle out of their obligations without care.

If these companies were banned tomorrow, I promise to buy everyone on UKBF a round!

 

[LowcostPR]

Additionally, before anyone starts thinking what a good idea this all is, would you be wooping for joy if someone used your services and decided to wriggle out of payment, despite having had full benefit of your services?

What would you think of this person?

 

[makaveli]

Um, no. I explained the differences to YOU already. unfair relationships (ppl being unfairly induced) can be challenged: a 140A-C CCA '05. Also, imperfectly executed agreements can be challenged - up to judge how he reacts (cancellation/amendment/ continuation).
In some cases, there may be wriggling - but, in light of the above explanation, do u not see that we are using the law (put their by government) to invalidate these agreements. so 140a explicitly states degree of financial pressure to be a relevant factor. and s65 expressly states a imperfectly executed agreement cannot be enforced without a court order.
How could you be for a nasty company preying on the poor? Like I say, these are not all poor people - but of course there will be no 'unfair relationship' if, for eg, there was no inducement bvo degree of financial pressure: eg if the individual debtor is not poor and that has not been unfairly taken advantage of.

Well, the Rankines are still paying us for agreements.

 

[makaveli]

how! we wipe their debt - they are free of it. where is the false hope? Government estimated 20 million mis-sold. so there.

 

[makaveli]

Simples: u wanna sell credit, do it all above board - then u cant be touched. u have problems with that? take it up with da law-makers.

 

[LowcostPR]

do u not see that we are using the law (put their by government) to invalidate these agreements. so 140a explicitly states degree of financial pressure to be a relevant factor. and s65 expressly states a imperfectly executed agreement cannot be enforced without a court order.

I'm aware that it is within the law, and I did not say otherwise. What I said was that it is wrong to try and encourage people to squirm out of their responsibilities, as when it backfires (which it often does) then the creditors will (quite rightly) get a CCJ on the debtor and jump for a Warrant Of Execution.

 

[LowcostPR]

How could you be for a nasty company preying on the poor?

Lenders do not “prey on the poor”. I’m quite concerned that if you are coming on here telling us this, what you are saying in your sales patter.

Anyway, a company that rings people in financial hardship, promising them the world knowing they are going to be desperate, and convincing them that you will get them off the hook, and then leaves them to clean up when it all goes wrong. Hmm, that seems to sum up a nasty company preying on the poor.

 

[LowcostPR]

how! we wipe their debt - they are free of it. where is the false hope?

Because you are hoping the creditor thinks it easier to cancel the debt than fight it. The day they get bored and fight it, then the courts will side with the creditors under the law of obligation. When the creditors fight back, then the debtor has paid for nothing and will have every creditor taking legal action and getting bailiffs out, as you have convinced them to try and squirm out of their responsibility.

Government estimated 20 million mis-sold. so there

Absolute rubbish. You have no way of backing this up with any actual evidence.

Simples: u wanna sell credit, do it all above board - then u cant be touched. u have problems with that? take it up with da law-makers.

It is the ones who do it above board that you are targeting, so don't pretend that what you are doing is somehow righteous.

Your somewhat unprofessional attitude is exactly the same as every debt cancellation company I have ever dealt with.

Currently, you’re lucky as your industry is totally unregulated, due to it being very new. However, the OFT is currently in the process of bringing in new laws and measures that will make sure you are not the ones causing big problems, like now.